US Labor Costs Rise by Most in a Year as Productivity Cools
Source: Bloomberg
Economics
* US Labor Costs Rise by Most in a Year as Productivity Cools
* Unit labor costs jump 4.7% after muted second half of 2023
Sustained productivity slowdown could limit inflation progress
Jobless Claims Hold Steady as Nonfarm Productivity Slows
By Molly Smith
May 2, 2024 at 8:34 AM EDT
Updated on May 2, 2024 at 9:02 AM EDT
US labor costs increased in the first quarter by the most in a year as productivity gains slowed, potentially adding to risks inflation will remain elevated.
Unit labor costs, or what a business pays employees to produce one unit of output after taking into account changes in productivity, climbed at a 4.7% annual rate. That marked a notable jump after muted gains in the second half of 2023.
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Read more: https://www.bloomberg.com/news/articles/2024-05-02/us-labor-costs-rise-by-most-in-a-year-as-productivity-cools
US labor market still tight; productivity falters in first quarter
By Lucia Mutikani
May 2, 20249:58 AM EDT Updated 22 min ago
https://www.reuters.com/markets/us/us-weekly-jobless-claims-unchanged-layoffs-decline-april-2024-05-02/
Summary
* Weekly jobless claims unchanged at 208,000
* Continuing claims steady at 1.774 million
* Productivity grows at 0.3% rate in first quarter
* Unit labor costs surge at 4.7% pace
WASHINGTON, May 2 (Reuters) - The number of Americans filing new claims for unemployment benefits held steady at a low level last week, pointing to a still fairly tight labor market that should continue to underpin the economy in the second quarter.
Economists largely shrugged off other data from the Labor Department on Thursday showing growth in worker productivity almost stalled in the first quarter, noting that the trend in productivity remained solid. They also argued that there was a seasonal quirk, which tended to bias gross domestic product and productivity lower in the first quarter.
At face value, the sharp slowdown in productivity and accompanying surge in labor costs would raise concerns about inflation pressures building up as well as profit margins being squeezed, which would impact demand for labor.
"We believe such fears are misplaced," said Conrad DeQuadros, senior economic advisor at Brean Capital. "We have identified residual seasonal adjustment bias in the quarterly GDP growth measures that depress first-quarter growth, and since productivity is measured by the sector's GDP divided by hours worked, this bias also depresses productivity."
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